Most young cable networks face the same tricky task: securing carriage on cable and satellite systems. New channels, particularly those without a heavyweight corporate parent, don't have the clout to get distribution. Forget analog carriage; sometimes it's a struggle just to secure space on digital tiers.
In an unusual ploy to keep from groveling to operators, the Tennis Channel is contracting Comedy Central's affiliate sales team to negotiate system-level deals and marketing. The Tennis Channel, slated for a fourth quarter 2002 launch, will handle its own corporate-level contracts with the top 15 MSOs.
But using Comedy's sales force as a hired gun, the Tennis team figures to save millions on expenses and wield more leverage in the field.
"We would not have been a well-oiled machine for a long time," said Tennis Channel CEO David Meister, a former Viacom exec who also helped launch the Sundance Channel. "There are so many hidden costs that it's hard to quantify."
Industry executives estimate that Tennis is paying Comedy Central around $2 million for its services plus sales incentives to Comedy sales reps. To set up its own affiliate sales team, from staffing field offices to travel expenses, could have cost the Tennis Channel up to twice that much.
Old ties between Tennis Channel execs —including Meister and Randy Brown— and the Comedy Central brass helped seal the deal.
Comedy's sales team has time to spare. Having grown to nearly 80 million homes, there aren't many operators left to pitch. Unlike other fully distributed independents, like E! Entertainment Network, A&E and Lifetime, Comedy is not building splinter digital channels. Comedy doesn't have a second act.
Fledgling nets go different routes to bulk up for distribution. Scripps Network uses HGTV crews to sell its young DYI: Do It Yourself channel, and the Food Network sales force is pushing freshly minted Fine Living.
Fox Cable Networks took a 70% stake in National Geographic and now distributes the channel. Discovery Networks doesn't own a piece of BBCAmerica per se, but the BBC and Discovery are partners in numerous joint ventures. Discovery handles ad sales and affiliate sales for BBCAmerica.
Brand-name backing has helped fuel rapid growth. Four-year old BBCAmerica counts 27 million subs, and year-old Nat Geo stands at nearly 25 million.
"Discovery opens any door they want to, and emerging nets have to persuade operators just to open the door," said BBCAmerica COO Paul Lee. "You immediately get your meetings."
But beyond a fee and commissions, Comedy Central doesn't have a piece of the Tennis Channel. Some cable execs speculate it could have an option, however.
And not everyone thinks it's a great idea. "It doesn't really create value if you're just distributing a channel for a couple of million dollars fee," said one cable executive.
Some networks contract distribution specialists to gear up. When Trio and News World International were Canadian networks trying to break into the U.S. cable market, Cathy Rasenberger was called in.
The former Food Network executive now specializes in helping new networks gain distribution. She acts as an executive VP of affiliate sales and brings in her own field sales team. Two years after she was brought on to help Trio and NWI, USA Networks swooped in and acquired the channels.
Rasenberger says the survival rate among new channels is very slim. "They can't compromise on experience, but they can't afford to hire their own staffs." Her current roster of clients includes African American-targeted NUE-TV, gay-themed Pridevision and several smaller ethnic services.
The Tennis Channel wanted help hammering out carriage deals, but Meister says he and investors, led by former Viacom exec Frank Biondi, didn't want to cede too much control.
Last year, the group started working with TVifusion, a network incubator started by former Showtime exec Jeffrey Reiss. But Tvifusion, Meister says, wanted to provide a wider range of services—from press to satellite uplinks—than his network required. Incubators also often seek a piece of the action.
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